Friday, April 03, 2009

I've been working on the internet and in some form of online advertising for the past 15 years, but I've never seen the landscape changing faster than it is changing now. Right before our very eyes, the way that media is being bought and sold is changing in an unprecedented way, at an unbelievably fast rate.

Since advertising began centuries ago, it has always revolved around selling and buying a media property, be it a newspaper, a tv channel, a billboard, a radio station, a web site or even a network that represented web sites, tv channels, newspapers, etc. Even when it came to targeting demographically, geographically, etc, marketers still achieved those targeting objectives by buying specific properties. This is still the most common way of buying media today.

However, this is changing rapidly due to new online advertising technologies -- user profile technologies that allow marketers to target the user no matter what media web site the user is on. I won't go into the details of how the technologies work, as there are far more expert articles already explaining methodologies like behavioral and intent-based targeting and re-targeting; that's not my goal here. Rather, I want to highlight the intellectual shift going on in the media buying and selling world, and particularly the implications for web publishers.

With a simple user profile cookie, a marketer can buy ad impressions on an ad exchange that is filled with countless page impressions that specific user is consuming across any number of web sites. So instead of buying golf.com (not picking on golf.com here -- just using as an example of what is becoming true for all web publishers) to target a 40 year old male who may or may not be interested in buying a car in San Francisco, an advertiser now has the ability to leverage an incredible array of registration and site visiting data to follow that user around 5o web sites with ads specifically about cars for sale in San Francisco. This isn't necessarily a new concept at all; we've been talking about behavioral and intent based targeting for several years now -- matching an ad cookie with a user cookie. What is new is the rapid realization for what this means for web publishers.

Web publishers invest significant resources to create content that attracts an audience, and hopefully a concentrated audience that an advertiser could use to reach a consumer with a certain need or area of interest. Further, these publishers have gone to great lengths to market and package their content with ads to have both great impact and attain a premium ad rate. Yet, with countless new ad targeting start-ups and ad buying platforms, an advertiser is no longer constrained to buying golf.com or any other single property, nor constrained to paying premium ad rates associated with a specific media property to reach that user. Instead, the advertiser can find that same user as they visit countless other sites and often on non-premium packaged pages with significantly lower ad rates.

So this begs the question: what does this mean for web publishers and their traditional revenue model? The answer is a long story with multiple thought streams for another blog post or two. The short story is this: the implications of new ad buying and selling technologies presents a staggering challenge for web publishers and the way they execute their business plans. What does this mean for ad unit pricing? Do you participate in data sharing or not join and risk being bypassed by advertisers altogether? How much do you invest in content, marketing? How do you sell what you have?

While I don't believe the traditional model of marketers buying specific web properties will go away, I do think these new technologies could significantly shift the mentality away from buying a property to buying audience wherever they are, and further, a consumer with a specific objective or interest. The shift is already taking place, yet I believe it will become a tidal wave within the next 12 months, particularly with the perfect storm of new technologies bring lower ad rates and higher ROIs in the midst of a severe recession.

18 comments:

If this trend leads to a categorical or unique CPM for each individual cookie in the universe, sites should benefit from having a better mix of advertisers helping to keep the look and feel of the site fresh with a better turnover in banners and skyscrapers, and less dependency upon a single sponsor or agency.

Moreover, if it leads to pricing based on relevance of content-to-spots, then a more logical marketplace evolves.

@Rich Reader: actually, what I'm saying is I think this is going to significanlty degrade the value of "premium" publishers. On the flip side, it should help the value of longer tail, small publishers.

@Anonymous: yes, you're partially right: it absolutely started several years ago. My point here is that I believe we've seen just the tip of the iceberg. This movement is only really picking up momentum now.

Has it ever even made sense to buy "publishers" on the web...in a traditional sense? Going on a website like golf.com certainly doesn't relate to someone who buys Golf Magazine - so an advertiser must view this differently. So you are right, the audience represents the BEST opportunity for publishers to earn the most from their audience...and the best opportunity for advertisers. Audiences will relate best to an ad based on the content they see it (and this is the publishers opportunity). I once clicked on a Coca-Cola ad because it was on a small music site with a cool integration, and I thought it looked interesting. I would never click on a Coca-Cola ad on Yahoo's homepage - but I am the same person and the same cookie. Where I see an advertisement almost means more than what the advertisement is....but that is perhaps just me.

Moreover, the great advantage of advertising your product with an ad, then your product is in an appropriate section. In other words, to write the keywords related to what you propose will be directed to the page your ad is running. If your ad is interesting because these people will probably click you that is what they originally sought.

About Me

I have been at various times: a car salesman, a travel writer, a political consultant, a voiceover artist, a photographer, a copywriter, a trader and a world traveler (yes, it was a career decision…) among several other things. For most of the last decade and a half, I have a made a living creating content and selling media on the internet (currently as the CEO of Technorati Media). I try to be not only a student of the world, but a participant as well. I learned more about my country living outside of it, and learned more about living while doing nothing.